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CME lifts corn, soybean shipping clause on the Illinois, Mississippi
 

By DOUG SCHMITZ

CHICAGO, Ill. — The CME Group finally lifted the May 2 force majeure it declared at registered Chicago Board of Trade (CBOT) corn and soybean shipping stations on the Illinois and Mississippi rivers because of high water levels and flooding.

“The CBOT rule declaring force majeure is triggered when the majority of corn and soy shipping stations on the river have difficulty loading because of high water levels or flooding,” explained Matthew Stroud, CME Group director of corporate communications.

“This is the longest time frame a force majeure has been in place. The previous force majeure was from February 27 to March 6, 2018, but this was just on the Illinois River and for corn.” The latest was lifted on June 18.

A force majeure clause is a contract provision that relieves the parties from performing their contractual obligations when certain circumstances beyond their control arise, making performance inadvisable, commercially impracticable, or impossible. However, a force majeure clause does not cover failure to meet contractual obligations due to negligence or lack of available funds.

Currently, the Illinois and Mississippi rivers allow for a majority of CME-approved regular corn and soybean shipping stations to load barges.

“While the CME made this recent announcement, barge transportation on the inland waterway system remains severely restricted or, in many locations, unavailable due to high water,” Mike Steenhoek, executive director of the Soy Transportation Coalition (STC) in Ankeny, Iowa, told Farm World.

The STC is comprised of 13 state soybean boards, the American Soybean Assoc., and the United Soybean Board. The 13 states encompass 85 percent of total U.S. soybean production.

According to the USDA, year-to-date barge shipments of soybeans and grain are only 65 percent of what they were last year during the same time period, Steenhoek said.

“Over the past week, a degree of barge service has returned to segments of the inland waterway system, but it still remains a significant challenge,” he noted.

With the recent price rebound of soybeans and grain, Steenhoek said many farmers desire to open the spigot and sell much of their remaining 2018 harvest that’s been in storage.

“Unfortunately, due to the flooding, there is not a very effective hose to hook up to the spigot,” he said. “Our multi-modal transportation system is that hose.”

In addition, according to the USDA, there has been a 210 percent increase in rail deliveries to Mississippi Gulf export terminals, compared to the same period last year due to restricted barge service, Steenhoek said. Shipping stations that remain unable to load must arrange for water conveyance to be loaded at another regular shipping station as set forth by CBOT.

“If barge service is unavailable, some soybean and grain shippers are having to resort to using rail,” he said. “While we are pleased that a degree of barge service has resumed, the forecast for additional rain in the area raises concern that lock and dam closures at various locations will once again be announced.

“There are a number of headwinds confronting farmers – challenges with planting a crop, a decrease in exports largely due to the trade standoff with China, et cetera. Exacerbating these challenges is an inability or, at least, a difficulty in delivering soybeans and grain to our customers. This adds insult to injury for America’s farmers.”

6/26/2019